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Tightening gold supplies could lift prices: Strategist

Althea Chang

Gold prices may be falling now, but some Asian investors' tightening hold on physical gold could cramp supplies of the metal and drive prices higher again, according to one company strategist.

With the surge in equities markets in the United States, some investors here have abandoned gold for stocks, according to Ed Moy, chief strategist at Morgan Gold and former director of the U.S. Mint.

Meanwhile, he said, investors in India and Southeast Asia have bought up that gold and are sitting on it.

"When Asians buy gold, they keep it. They pass it down from family member to family member," Moy said. "So with all that gold off the market in Asia, and with the gold prices as low as they are, there's going to be a supply crunch should there be increased demand in the West for gold."

And while concerns that the Federal Reserve will soon taper its bond-buying program have led to some shorter-term swings in the gold market, prices will eventually normalize, Moy said.

If you look at history and the data, the data will show that gold prices tend to go in lockstep with the federal debt and the debt ceiling," he added.

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